Most school districts see money savings from Act 10

But state cuts have hurt

BY DENEEN SMITH

and JILL ROZELL

As school districts move into their second year operating under Act 10, western Kenosha County school districts still are working through the impact of the law that virtually eliminates collective bargaining.

In the budget action, Gov. Scott Walker and the Legislature dramatically cut back collective bargaining for most public employees, mandated employee contributions to health care and retirement benefits, and set strict limits on staff wage increases.

Wage increases are capped by the state, with the maximum set at the percentage increase of the consumer price index. Additionally, that wage increase will be calculated off the lowest base pay of the district.

Along with those changes, the state cut state aid and reduced schools’ revenue limits overall by 5.5 percent. Those cuts hit western Kenosha County school districts unevenly, with a small number of schools with growing enrollment seeing far smaller cuts while those with declining enrollment suffering sharper declines.

All districts in the county were able to cut expenses using Act 10. Reductions in benefit costs were as high as 21 percent in some districts.

Paris outlook improved

For Paris School District, the changes — along with growing enrollment and higher numbers of open enrollment students — have made a huge difference in the district’s financial outlook.

Several years ago, Paris was in such serious financial trouble the School Board told voters it may have to dissolve the district. According to Administrator Roger Gahart, Act 10 allowed the district to lower its benefits costs by changing health care plans and requiring teachers to pay 12.6 percent of the premium.

Perhaps more importantly for the long-term health of the district, Gahart said, eliminating the union contract allowed the district to eliminate post-retirement benefits for teachers.

Although the district must continue to pay those benefits to teachers who already have retired, he said the board will pay existing staff a lump sum based on years of service at the time of the elimination of the contract.

The total cost of that payment will add up to $144,700, and will eliminate future payments for retirement benefits beyond what teachers will receive through the state retirement system.

“Open enrollment and Act 10 and the changes that Act 10 allowed us to make with our post-employment liabilities are the two key factors in the changes in our financial well-being,” Gahart said.

Gahart said the changes did not affect the climate in the school.

“We truly have not had morale issues,” he said. “I couldn’t be more proud of how hard (the teachers) work.”

Uncertainty created

Other districts said the change in state law allowed them to offset most of the revenue cuts, but have created an uncertainty.

At Salem School, which has been dealing for years with constrained finances, the school lost $470,000 through the cut in the revenue limit, and was able to cut benefits by $427,737 through Act 10.

Andrew Feuling, Salem’s business manager, said Salem already had shifted to a cheaper health insurance plan before the changes in state law took effect. The ability to make teachers pay 12.6 percent did save the district money, as did having teachers pick up payments toward the state retirement system.

“But when the revenue limit drops by a similar amount, it’s not like you come out ahead. ... It’s not like we all of the sudden had $500,000 more to spend on kids,” Feuling said.

For Salem staff, Feuling said, the shift of benefit costs to staff added up to about a 7 percent pay cut for teachers.

“Financially, I’d say it was as a wash. It definitely gives us more flexibility,” he said.

Hard on staff

But he and Salem Administrator Dave Milz said the changes have been hard on staff at the same time they have taken on bigger workloads because of staffing cuts and new state initiatives on curriculum and testing standards.

“We’re being asked to do more with fewer people, and those fewer people are having to do more work while being paid less,” Milz said. “That’s obviously been hard on educator morale. ... I think people feel like they are walking around with targets on their backs.”

Health plan changes

Riverview School Administrator John Gendron said while Act 10 allowed the district to require teachers to contribute toward the cost of health care, he feels a change in the health service plan and provider could have been negotiated without Act 10.

“I think the contribution part of the changes we have made here is definitely attributed to Act 10,” Gendron said. “Our district was exploring the plan design and carrier change, and I believe we would have been able to accomplish that regardless of Act 10.”

Like many districts, Riverview moved to a high-deductible plan.

Gradual shift

Central High School made more gradual changes in its benefit plan, asking teachers to pay 6 percent of their health insurance premium last school year, rather than the 12.6 percent allowed under Act 10.

Administrator Scott Pierce said his board “wanted to keep the pain as minimal as possible” while still “using the tools that were there” to lower costs.

“I think it’s working out well for us as a district. Obviously it’s the first year, so it’s a hit on (the teachers) regardless,” he said. “For us, Act 10 is working for us. We took advantage of it, and it’s been very helpful to us.”

Benefit cost rises at Wilmot

At Wilmot High School, with the elimination of the union contract, the district joined Paris in eliminating post-retirement benefits.

Most districts saw double-digit decreases in the overall cost of benefits. At Wilmot, however, the cost of benefits overall rose 5.8 percent from 2011to 2012 because of a one-time cost.

The district had $3 million to $4 million of unfunded post-employment benefits. It was able to reduce that through an $800,000 buyout. This inflated the cost of benefits now, but will save the district a significant amount of money in the long run, he said.

While the cost of benefits increased overall for Wilmot as a result of the buyout, the cost of health insurance and retirement contributions decreased.

Long-term impact

Kopp worries about the long-term impact of Act 10.

“For the last two years, public school teachers have been vilified by many in this state. I stand by the fact that the faculty and staff of Wilmot High School are the best they have ever been and are working harder now than ever, yet some outside of education do not recognize the effort and success the educators are currently displaying,” Kopp wrote in an email.

“Additionally, I am fearful of how many people who may have been excellent teachers have turned away from the profession due to the treatment public educators have incurred.

“Honestly, we may not see the real results of this for five to 10 years when the quality of education has decreased because potential educators no longer want to pursue education as a career and our current teachers become disenchanted due to the pressure they are under.”

Next: How Act 10 affected Kenosha Unified and three specific county school districts.